How ‘The Toyota Way’ Has Revolutionized The World

As you may have heard, Toyota has finished 2012 as the world’s largest automaker, outselling GM, Nissan/Renault, and VW. Their secret? The Toyota Production System (TPS), which emphasizes efficiency and quality above all else.

As a result of Toyota’s consistent success, the Toyota Production System (also known as ‘The Toyota Way’) has been studied and emulated the world over. Here’s a brief overview of Toyota’s legendary manufacturing system and how it’s changed the world.

What is the Toyota Production System?

The Toyota Way is an integrated socio-technical system and one of the major precursors to lean manufacturing. Toyota Motor Company began using these techniques in the 1950s and 1960s. Many credit Toyota’s overall success (and resilience to recent difficult market conditions) to the Toyota Production System.

While there have been dozens of studies written about the Toyota Production system, it can be summed up in three principles:

Quickly and clearly identifying and addressing problems with well-thought out solutions.

The TPS gained international attention as Toyota continued to boast one of the fastest growing market shares in the automotive industry. In 1998, Toyota could complete a vehicle in half the hours it took GM or Ford. By 2009, the American companies had embraced their owner variants of lean manufacturing and were closing the gap. Currently, Honda, Chrysler, Porsche, GM, and most every major automaker has adapted some form of the Toyota Production System.

TPS Impact on Manufacturing

Top companies around the world have taken notice of Toyota’s success. In the past decade, jet-maker Boeing and machinery-marker Caterpillar, have repeatedly rebuilt their plants and re-engineered their processes to emulate Toyota. Both companies experienced increased profitability after making these changes.

During the recent economic downturn, Caterpillar used the TPS principle of kaizen to quickly identify the drop in manufacturing demand and to cut back production, retaining their profitability in a down market.

Even non-automotive, non-machinery manufacturers have worked to adopt the key tenets of the Toyota Production System. U.S.-based Batesville Casket Company, for example, attributes their success in a declining market to “the Toyota Way,” working to improve casket production processes and reduce overall costs – even as revenue declined.

Toyota Production System Beyond Manufacturing

Implementation of the TPS isn’t limited to manufacturing. When hospital workers at Barnes-Jewish Hospital began adopting Toyota’s lean process, stroke patients began receiving damage-mitigating treatments 20 minutes faster…a crucial time savings. What’s more, many healthcare organizations including Medicare and Medicaid have found the waste-reducing measures positively impact safety and care-quality. The fiscal benefits of eliminating unnecessary processes and procedures will be felt by both institutions and individuals.

After hurricane Katrina, the Toyota Production System Support Center (TSSC) teamed up with 20 New Orleans recovery initiatives. Among those programs was the St. Bernard Project, a home rebuilding nonprofit dedicated to employing military veterans. TPS principles were able to decrease build-time by 20% and help the St. Bernard Project employ three times as many veterans.

Another example; The Toyota Production System’s advances in waste reduction have caught the EPA’s attention. In 2003, the EPA published a case study report of lean manufacturing activities and environmental benefits.

Since the report, the EPA has teamed up with several companies, manufacturing extension partnerships, and Federal facilities to promote TPS-inspired practices. In 2006, the EPA provided a “Lean and Environmental Toolkit” to help business translate pollution prevention into proactive overhead reduction. The basic toolkit guidelines mirror the fundamental principles of the Toyota Production System.

Toyota’s Genius Has Changed The World

Successful applications of the Toyota Way continue to improve businesses and fundamentally alter entire industries. Thousands of companies have enjoyed financial gains over the last half-century that all came from implementing the basic principles of the Toyota Production System.

While Toyota is best known as a car company, it’s also appropriate to think of them as one of the world’s most innovative manufacturing companies as well.